Bank of Korea 'April 2021 Balance of Payments (Preliminary)'
[Asia Economy Reporter Kim Eun-byeol] South Korea's current account balance for April recorded a surplus, defying expectations. April is a month when foreign dividend payments by companies, including Samsung Electronics' special dividends, significantly increase, but the sustained export boom was equally influential. This is another economic indicator proving that the pace of global economic recovery is faster than expected.
According to the "April 2021 Balance of Payments (Provisional)" announced by the Bank of Korea on the 8th, the current account balance for April recorded a surplus of 1.91 billion dollars, turning to surplus compared to the same month last year. In April last year, the current account balance posted a record deficit of 3.3 billion dollars due to a sharp decline in exports caused by lockdown measures worldwide amid the COVID-19 pandemic, combined with corporate dividend payments. In contrast, this year, despite increased dividend payments, a surplus was recorded.
Accordingly, South Korea's current account balance has recorded a surplus for 12 consecutive months since May last year. The surplus in April marks the first time in three years since April 2018.
The recovery in both exports and imports, supported by the global economic recovery, had a significant impact. April exports amounted to 52.17 billion dollars, an increase of 16.65 billion dollars compared to the same month last year, and imports also rose by 12.79 billion dollars to 47.61 billion dollars.
Exports increased for six consecutive months due to continued strong performance in passenger cars, chemical products, and semiconductors, as well as recovery in petroleum and steel product exports. Imports increased across raw materials, capital goods, and consumer goods due to rising raw material prices, continued semiconductor facility investments, and expanded consumption of durable goods (home appliances and passenger cars).
As global cargo volume suddenly surged, shipping demand increased, raising freight rates and revitalizing the service account. The service account recorded a surplus of 10 million dollars in April, turning to surplus compared to the same month last year. The Shanghai Containerized Freight Index (SCFI) for April jumped 232.4% year-on-year, increasing maritime freight transport income to 3.13 billion dollars. Consequently, the transportation account recorded a surplus of 810 million dollars, expanding the surplus by 770 million dollars compared to the same month last year.
The primary income account posted a deficit of 1.95 billion dollars as expected due to increased corporate dividend payments. However, the deficit size decreased from 2.25 billion dollars in the same period last year, thanks to increased dividend income from domestic institutional investors as well as dividend payments.
In the financial account, domestic residents' overseas direct investment increased by 4.33 billion dollars, and foreign investment in South Korea increased by 2.6 billion dollars. Domestic residents' overseas securities investment rose by 4.84 billion dollars, and foreign securities investment in South Korea increased by 6.13 billion dollars.
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